Hiring slowed in November due to Sandy, payroll firm says

WASHINGTON -- A private survey shows that U.S. businesses added fewer workers in November, mostly because Superstorm Sandy shut down factories, retail stores and other companies.

Payroll processor ADP said Wednesday that employers added 118,000 jobs last month. That's below October's total of 157,000, which was revised lower.

Mark Zandi, chief economist at Moody's Analytics, says the storm cut payrolls by an estimated 86,000 jobs. Excluding the effects of the storm, "the job market turned in a good performance during the month."

Advertisement

ADP and Moody's Analytics are calculating job gains with a different methodology than the survey previously used. The new method covers more businesses. Previous ADP reports frequently produced figures much different than the government data.

The report only looks at hiring in the private sector and excludes government hiring. The Labor Department will offer a more complete picture of the November job market on Friday.

The storm is also expected to affect that Labor Department report and many economists expect it will show even fewer jobs added. Some are predicting as few as 50,000 jobs added in November. The unemployment rate is expected to rise to 8 percent from 7.9 percent.

A key reason the reports are expected to diverge: ADP counts someone as employed if they remain on a company's payroll, even if that business is closed and employees aren't paid. The government counts them as employed only if they are paid.

Even without the storm's impact, hiring has been only modest this year. Employers have added an average of 157,000 jobs per month since January, barely enough to lower the unemployment rate.

There is little sign yet that business concerns over potential tax hikes and government spending cuts next year are weighing on hiring, Zandi said. Large tax increases and deep spending cuts will kick in Jan. 1 as part of the so-called "fiscal cliff" unless the White House and Congress reach a deal.

"I've not picked that up in the ADP data or any other job-related data," he said.

Businesses have cut back on investment in heavy machinery, computers and other equipment, Zandi said. But they are less likely to cut jobs or even delay hiring just because of the uncertainties created by the cliff, which is likely a temporary problem.